Manukau social work student Mere Thompson: "I don't think I would have started the journey if [free fees] wasn't made available." Photo / Michael Craig
When the first day of university started last year, more than 46,000 students walked into class with one less burden than those who have gone before them.
They didn't have to worry about how they were going to pay for their first year of study. They could focus on learning, not debt - roughly to the tune of several thousand dollars.
The 2018 cohort of tertiary students were the first in 29 years to benefit from essentially fees-free study, unlike hundreds of thousands who have gone before them and ended up with loans reaching well into the tens of thousands. The top 10 borrowers still owe more than $400,000 each.
Released from at least part of their debts, how will the lives of this new generation be different from those who had to pay for all of their study?
Will it encourage more young people to pursue higher education?
Some initial surveys have indicated that has been the case, but it is early days.
South Auckland solo mum Mere Thompson says she would not have taken the plunge into study in her mid-thirties without the fees-free policy.
Thompson, 37, started a social work degree at the Manukau Institute of Technology (MIT) in the first year of the fees-free scheme last year.
She already had a good job managing an NZ Post delivery branch in Papakura, and she needed to support herself and her 9-year-old daughter. But she felt drawn to social work.
"I have always been available to be a kind of support person for whānau and friends and for some work colleagues," she says. "I seem to be always the one that people go to. It felt right."
But it was a huge risk financially. She has dropped from a fulltime wage to a student allowance, but at least she didn't have to pay tuition fees.
"That's $6000 I don't have to worry about. When you're a solo parent, that's a lot of money that you need to pay for later on down the track," she says.
She says it was hearing about the new fees-free policy that actually made me think, "do I go back and study?"
"I don't think I would have started the journey if it wasn't made available."
![Manukau social work student Mere Thompson: "I don't think I would have started the journey if [free fees] wasn't made available." Photo / Michael Craig](https://www.nzherald.co.nz/resizer/v2/ANEIRAWH73MRFEZ7MHN6NRKRWY.jpg?auth=1b5f9dbb4b4bd78a4e15b38fb5f95707d5c818ce685ce5792de7f025b5dfc3f5&width=16&height=11&quality=70&smart=true)
In her second year she has won a $2000 Kate Edgar scholarship, but has taken a student loan to pay the other $4000, and will have to borrow again for the remaining two years of her degree.
But she has finally found her vocation.
"Last year, before I started my studies, I was determined that I was going to work with women and children," she says.
"But this year that's really changed. At the moment I'm looking towards a field that is around youth. I seem to want to be in an environment where I work with probably the 11 to 15, 16-year-old, age group, before they kind of make decisions that could affect their adult life.
"I want to try and help them avoid getting into problems as an adult."
Most first-year domestic tertiary students have saved an average of nearly $7000 since last year under the fees free scheme.
Those whose family incomes are low enough to get student allowances - about a quarter of them - should be able to come out of study that much less in debt than those before them. That's a significant saving on average debts of $27,000 for students leaving bachelor-level study in 2016.
That saving is already relieving financial stress for hard-up students, and is encouraging a few more people to give tertiary study a go.
In the longer term, it may also reverse some of the changes that the student loan scheme has wrought in "Generation Debt", the group who started tertiary education in the years from 1990 to 2017 when they had to pay significant fees for every year of study.
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The fees-free generation may feel slightly more free to make life choices based on lifestyle rather than just pay, to cope with living expenses better after paying off their loans faster, and to buy homes sooner.
These effects may be only slight as long as only the first year of study is fees-free. The Labour Party promised at the last election to make three years fees-free by 2024 but that is now in doubt.
On the other hand, if National wins next year's election, it says the fees-free scheme will not survive "in its current form".
Fees free has certainly helped ease the pressure for Ethan Hansell-Hunt, a first-year architecture student at Unitec.
The 18-year-old drives in from South Auckland and, despite the first year being free, he sometimes struggles financially, even with a student allowance.
While his course fees are covered by the fees-free scheme, he still has to pay for materials to produce plans and models.
"For an average project I've had to spend maybe $100 or $150, and it's usually a weekly project. For the next week it's another $50 or $100 to make the next model," he says.
"The student allowance is covering the resources that I need, but I also need extra for transport and other purposes, and due to being real far from where I study it's difficult to get home and back.
"There were times when I didn't have any money to get myself to uni, so I had to work from home [before the allowance kicked in]. I'd have to miss out classes due to not being able to get to uni."
Hansell-Hunt says he probably would have gone to Unitec even without the fees-free scheme, "but it would have been more of a financial struggle".
"In my experience it's been real helpful," he says.
"Next year I'll have to get a student loan, and probably work a bit more, to keep it stable. I have a part-time job but it's only four hours a week because I kind of focus on studying. I think next year it will have to be over those long holidays that I work and save up."
Many other students also struggle. A 2017 survey found 18 per cent of Unitec students said they "regularly go without food and other necessities because I cannot afford them". For Māori and Pacific students it was 27 per cent.
Almost half of the Māori students, 39 per cent of Pacific students and 26 per cent of other students said they had seriously considered quitting in the past year because of the struggle.
Ateliana Taufa, another South Aucklander now in her first year of health science at Otago University, says she would have taken a gap year to save money if she hadn't won an Otago scholarship for Pacific students.
"I was fortunate enough to get the scholarship to help out with my accommodation, and I didn't really have to worry about the tuition fee because the first year is free. That was a great start," she says.
She has wanted to study dentistry since she was about 10 years old, when a family member needed dental treatment. But getting into dentistry is extremely competitive.
"We are competing with each other to try and get into that spot for next year," she says.
She sees "pros and cons" in the fees-free scheme.
"It's useful, because coming to uni, all you want to do is focus on your studies and not worry about how are you going to get the money to pay your tuition, and also for our families, they don't really have to worry about anything for the first year," she says.
"But I don't think it should be for more than the first year because people would just take advantage of it.
"One year is good. It's just for people to go and do what they want at uni, just try and figure out if they want to do uni or not, and find what area of study you're into."
The evidence suggests that making the first year fees-free from last year has enticed more people to give tertiary study a go.
At first glance, it's hard to see any sizeable effect. Fulltime-equivalent students dropped by 1 per cent and work-based trainees fell by 5 per cent, last year. Universities NZ says domestic university enrolments have declined by a further 0.7 per cent this year.
However, Ministry of Education forecasts last year, without allowing for fees free, projected a decline in the number of students based on low unemployment rates so it's no surprise there are no large increases in enrolments.
That doesn't mean the initiative isn't working though.
A survey of all first-year students at Canterbury University last year found that 6 per cent said the fees-free policy had "a lot" of influence, and a further 29 per cent said it had "some" influence, on their decision to enrol.
A smaller survey of 150 stage one psychology students found 20 per cent said they would not have enrolled if they had had to pay fees.
Another survey of 297 students who got the fees-free subsidy at Napier-based Eastern Institute of Technology (EIT) found that four-fifths had already decided to study before the subsidy was announced, but 90 per cent of those who had not already decided said the fees-free policy encouraged them to study "some" or "a great deal".
EIT researcher Pii-Tuulia Nikula found that older students aged 25-plus were most likely to say the fees-free policy encouraged them to take up study.
But there is no sign of this in the national statistics, which show a slight drop in the proportion of people aged 25-plus in tertiary education last year, in line with the decline in unemployment.
If fees-free had any effect, it was in the 18-19 age group where the proportion in level-3-to-bachelor's study levelled off last year after declining since 2012.
Most older people are shut out of fees-free because they have already done some tertiary study.
So far the fees-free scheme has had only a modest effect on total student debt. Although borrowing for course fees last year fell by almost $200 million, borrowing for living costs rose by almost half of that because both student allowances and the maximum loans for living costs were raised by $50 a week - an amount that has to be paid back.
It is still a sharp break with the past, though. Students who started last year are likely to be the first cohort since 2006 to complete their bachelor's degrees next year with less debt than the cohort before them.
Economist Isabelle Sin, who found that graduates with bigger loans between 2005 and 2013 were more likely to move regions to seek higher-paid jobs, expects the reverse effect when the average debt falls.
"If you benefit from fees-free, you will come out with a much less powerful driver to go to the highest-paying job in the country you can find," she says.
"Students coming out of fees-free will be more likely to go and live where they want to live for lifestyle reasons, and less likely to choose the highest-paying jobs."
In 2016, half of bachelor-level graduates were expected to repay their loans within nine years, and 90 per cent within 21 years.
Less borrowing means that on average they will pay off their loans faster. The 12 per cent student loan surtax will drop out of their taxes at younger ages, relieving financial stress in the child-rearing years and making it easier to afford a mortgage.
Labour's 2017 election policy promised to extend fees-free to two years from 2021 and three years by 2024, to "reverse the worrying decline in tertiary participation" and to "equip the younger generation for the jobs of the future".
Its manifesto earmarked $340m a year from last year, $743m a year from 2021 and $1.2 billion from 2024.
But it actually spent only $300m on free fees in the year to this June. Finance Minister Grant Robertson said the original costings assumed that enrolments would increase by 15 per cent. In fact, as we have seen, they fell.
Robertson said no decision had been made on whether to extend free fees to a second or third year, saying that remained Labour Party policy "until it's not".
The Ministry of Education website records that the ministry briefed Education Minister Chris Hipkins on August 13 on "options to expand fees-free".
Asked to elaborate, Hipkins gave the Herald a brief statement: "As outlined in the Speech from the Throne, the Government will look at expanding fees-free in future terms of government. Any changes to the student loan policy is a matter for future Budgets."
Universities NZ chief executive Chris Whelan says he would be surprised if Labour makes the second year fees-free, and suggests that the extra $250m a year that it would cost could be put into more targeted support.
"There are models," he says. "Waikato University offers a system where they send a bus around all their local schools so the schools that can't afford to run the full secondary school science curriculum can send their kids to do it at university.
"Massey sends out university teachers to schools to support schools in the science curriculum."
National Party tertiary education spokesman Dr Shane Reti also mentions Waikato's bus, saying the best way to increase access to tertiary education is to close the shocking gap in school-leavers with University Entrance - 71 per cent in decile 10 schools and just 13 per cent in decile 1.
"Fees-free is the wrong lever to increase participation," he says.
"On a principled basis, in its current form, we will not be supporting fees-free.
"We are looking at what our policy will be, but it will be on a principled basis that support for students will be through levers that increase participation, and increase completion rates, in a way that is sustainable."
• Tuesday: How student loans defined a generation.
• Wednesday: Was the debt worth it?
• Today: Will today's students be any better off?
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